CollectionsApr 26, 2024
Piece of the Week: Jacquie Aiche’s Starry Galaxy NecklaceThe necklace is featured in the brand’s “Rebel Heart” campaign starring Adam Levine and Behati Prinsloo.
EditorsSep 19, 2017
South Dakota, Online Sales Tax and the Supreme Court
Last week, South Dakota’s highest court shot down Senate Bill 106. Here’s why it matters in the ongoing fight over internet tax.
Unless you’re one of the 800,000-plus residents of South Dakota, it’s unlikely you’ve heard much about Senate Bill 106.
Introduced in the state legislature by a bipartisan group of seven senators and eight representatives last year, S.B. 106 mandates that companies that make more than $100,000 in sales or have more than 200 transactions per calendar year in South Dakota remit sales tax, whether they have a physical presence in the state or not.
In introducing the bill, legislators argued that, first, the state needs the revenue it’s missing from online sales and, second, that the current law of the land, so to speak--Quill Corp. v. North Dakota--needs to be re-evaluated.
Quill is the U.S. Supreme Court ruling from 1992 that prevents states from collecting sales tax from sellers with no physical presence in the state; the overarching argument of internet tax proponents everywhere is that this 25-year-old law is now wildly outdated given how consumers shop today.
S.B. 106 passed both houses with little opposition and South Dakota’s Republican governor, Dennis Daugaard, signed it into law in March 2016.
It wasn’t long after the bill’s passage that three online retailers, Overstock.com Inc., WayFair Inc. and NewEgg Inc., pushed back and the case wound its way through South Dakota’s legal system, landing with the state Supreme Court in short order.
Salt Lake City-based Overstock.com sells a variety of merchandise, including fine jewelry, ranking among the $100 Million Supersellers in the 2016 State of the Majors report and, spoiler alert, in the soon-to-be-published 2017 edition as well.
WayFair, meanwhile, is a Boston-based online seller of furniture and home décor, and City of Industry, California-headquartered NewEgg is an electronics retailer.
In a ruling issued last Wednesday authored by Chief Justice David Gilbertson, the court sided with the e-tailers, stating that: “However persuasive the state’s arguments on the merits of revisiting the issue, Quill has not been overruled. Quill remains the controlling precedent on the issue of Commerce Clause limitations on interstate collection of sales and use taxes.”
Despite the court’s siding with the internet sellers, Chris Fetzer of Haake Fetzer, the firm that lobbies for Jewelers of America on behalf of the industry in Washington, said that the authors of the bill do not view the ruling as a failure.
It is, in fact, exactly what they wanted.
“It was fully expected that it (S.B. 106) would be challenged as illegal. This law was written to be challenged within
Editors' Picks
Sponsored by
the court such that that the challenge could serve as a vehicle for the U.S. Supreme Court’s reconsideration of the Quill decision,” Fetzer told me Monday, adding that similar actions are being taken in other states, including Indiana and Alabama.
What has compelled them is a recent statement from U.S. Supreme Court Justice Anthony Kennedy in the DMA vs. Brohl case, which reads in part: “[T]he internet has caused far-reaching systemic and structural changes in the economy” so that “a business may be present in a state in a meaningful way without that presence being physical in the traditional sense of the word.”
He said that it is “unwise [for the U.S. Supreme Court] to delay any longer a reconsideration of the court’s holding in Quill.”
I reached out to Overstock.com, the lone jewelry retailer out of the three, for comment on the ruling and Kennedy’s comments late Monday afternoon.
The company was not able to respond by press time, but board Chairman Jonathan Johnson told Bloomberg that proponents of online sales tax are putting too much emphasis on that statement from Kennedy and have no assurances that the U.S. Supreme Court will take up the case or, if it does, rule in their favor and overturn Quill.
I think the statement from Justice Kennedy is pretty clear, but Johnson is right about one thing: There is no guarantee that the Supreme Court will decide to hear the case, though the chances increase if more states get involved.
Fetzer said typically, what most attracts the Supreme Court to take up a case is a “circuit split,” when multiple federal appeals courts have ruled in conflict on a given issue.
That is not at play in this instance, but what also can be attractive is when there’s an issue that multiple states are concerned about, which could happen here as more states could join South Dakota in petitioning the Supreme Court to review Quill.
Johnson also is right about another thing: There is no guarantee the court will rule to overturn Quill even if it does take up the case.
But, Fetzer points out, Kennedy’s comments indicate that he would be in favor of changing Quill and the court’s newest justice, Neil Gorsuch, also has expressed his support for the arguments that have long been put forth by internet sales tax proponents.
The court’s next term commences in October, so there’s a chance it could revisit the Quill decision between next month and June 2018.
We’ll keep you posted.
What has compelled them is a recent statement from U.S. Supreme Court Justice Anthony Kennedy in the DMA vs. Brohl case, which reads in part: “[T]he internet has caused far-reaching systemic and structural changes in the economy” so that “a business may be present in a state in a meaningful way without that presence being physical in the traditional sense of the word.”
He said that it is “unwise [for the U.S. Supreme Court] to delay any longer a reconsideration of the court’s holding in Quill.”
I reached out to Overstock.com, the lone jewelry retailer out of the three, for comment on the ruling and Kennedy’s comments late Monday afternoon.
The company was not able to respond by press time, but board Chairman Jonathan Johnson told Bloomberg that proponents of online sales tax are putting too much emphasis on that statement from Kennedy and have no assurances that the U.S. Supreme Court will take up the case or, if it does, rule in their favor and overturn Quill.
I think the statement from Justice Kennedy is pretty clear, but Johnson is right about one thing: There is no guarantee that the Supreme Court will decide to hear the case, though the chances increase if more states get involved.
Fetzer said typically, what most attracts the Supreme Court to take up a case is a “circuit split,” when multiple federal appeals courts have ruled in conflict on a given issue.
That is not at play in this instance, but what also can be attractive is when there’s an issue that multiple states are concerned about, which could happen here as more states could join South Dakota in petitioning the Supreme Court to review Quill.
Johnson also is right about another thing: There is no guarantee the court will rule to overturn Quill even if it does take up the case.
But, Fetzer points out, Kennedy’s comments indicate that he would be in favor of changing Quill and the court’s newest justice, Neil Gorsuch, also has expressed his support for the arguments that have long been put forth by internet sales tax proponents.
The court’s next term commences in October, so there’s a chance it could revisit the Quill decision between next month and June 2018.
We’ll keep you posted.
More on Editors
The Latest
Events & AwardsApr 26, 2024
AGS Conclave and GIA Symposium Are ConvergingThe two organizations will host a joint event, “Converge,” in September 2025.
SourcingApr 26, 2024
Anglo American Reportedly Shopping De Beers as BHP Eyes Anglo Big changes appear to be on the horizon for the diamond miner and its parent company, Anglo American.
Brought to you by
The Blueprint for Success in Scalable, Personalized Jewelry RetailWith Ho Brothers, you can unlock your brand's true potential and offer customers the personalized jewelry experiences they desire.
Events & AwardsApr 25, 2024
Alexis Padis Takes Over as AGS Board President Padis succeeds Lisa Bridge, marking the first time the organization has had two women board presidents in a row.
Weekly QuizApr 26, 2024
This Week’s QuizTest your jewelry news knowledge by answering these seven questions.
WatchesApr 25, 2024
Audemars Piguet and John Mayer Partner on Limited Edition WatchThe Royal Oak Perpetual Calendar "John Mayer" was celebrated at a star-studded party in LA last week.
SourcingApr 25, 2024
De Beers Lowers Production Guidance for 2024The announcement came as the company reported a 23 percent drop in production in Q1.
Brought to you by
How Jewelers of America Represents Your BusinessFor over 30 years, JA has advocated for the industry, fought against harmful legislation and backed measures that help jewelry businesses.
MajorsApr 25, 2024
Detroit Lions’ QB Jared Goff Keeps Going to JaredThe three-time Pro Bowler continues to partner with the retailer, donating to a Detroit nonprofit and giving watches to fans.
CrimeApr 24, 2024
Jewelry Crime Declines Significantly, But Dollar Losses Remain High A double-digit drop in the number of in-store crimes was offset by a jump in off-premises attacks, JSA’s 2023 crime report shows.
CollectionsApr 24, 2024
Pippa Small Announces ‘Venus’ CollectionInspired by the Roman goddess of love, the designer looked to the sea for her new collection.
FinancialsApr 24, 2024
Kering’s Jewelry Brands a Bright Spot in Tough Q1The luxury titan posted declining sales, weighed down by Gucci’s poor performance.
Events & AwardsApr 24, 2024
JCK Industry Fund Announces 2024 Grant RecipientsThe selected nine organizations have outlined their plans for the funds.
SourcingApr 24, 2024
Rio Tinto’s Q1 Production Drops Amid Pause to Honor Lost Colleagues The mining company’s Diavik Diamond Mine lost four employees in a plane crash in January.
WatchesApr 24, 2024
These Are Rolex’s New Watches for 2024 The crown introduced a dozen timepieces in Geneva, including a heavy metal version of its deep-sea divers’ watch.
ColumnistsApr 23, 2024
The Smart Lab: Advanced Email Marketing Strategies for Mother’s DayEmmanuel Raheb recommends digging into demographic data, customizing your store’s communications, and retargeting ahead of May 12.
IndependentsApr 23, 2024
Hannoush Jewelers Opens New Store in New York Located in the town of Queensbury, it features a dedicated bridal section and a Gabriel & Co. store-in-store.
SourcingApr 23, 2024
Lucapa Sells 3 Diamonds for $10.5M in First Lulo Tender of 2024A 203-carat diamond from the alluvial mine in Angola achieved the highest price.
GradingApr 23, 2024
GIA Has a New Book About William RuserRuser was known for his figural jewelry with freshwater pearls and for his celebrity clientele.
CollectionsApr 22, 2024
Jacquie Aiche’s New Campaign Stars Adam Levine, Behati PrinslooThe “Rebel Heart” campaign embodies rebellion, romance, and sensuality, the brand said.
SourcingApr 22, 2024
Virtual Diamond Boutique Rebrands as ‘VDB’The overhaul includes a new logo and enhanced digital marketplace.
MajorsApr 22, 2024
Signet Raises Nearly $9M for St. Jude Children’s Research HospitalThe money will go toward supporting ongoing research and aftercare programs for childhood cancer survivors.
CollectionsApr 19, 2024
Piece of the Week: Retrouvaí’s Treasure NecklaceA new addition to the “Heirloom” collection, this one-of-a-kind piece features 32 custom-cut gemstones.
CrimeApr 19, 2024
Grand Jury to Hear Case Against Jeweler Charged in Fatal Shove Following IJO ShowLast month in Dallas, David Walton pushed another jeweler, David Ettinger, who later died.
MajorsApr 19, 2024
Unique Designs Acquires China PearlThe move will allow the manufacturing company to offer a more “diverse and comprehensive” range of products.
GradingApr 19, 2024
AGS Ideal Report Now Available in Printed FormFrom now through mid-May, GIA will be offering the reports at a 50 percent discount.
SourcingApr 18, 2024
Diamond Trade Remains Cautious Amid Economic UncertaintyDe Beers’ rough diamond sales were down 18 percent year-over-year in its latest round of sales.
